How Amazon’s Hire of Startup Adept AI Avoids Antitrust Scrutiny

A few months ago I was sitting in the audience at a technology conference in San Francisco watching BloombergEmily Chang’s interview with Reid Hoffman.

She asked about Microsoft’s hiring of the team behind Inflection, a potential OpenAI competitor that Hoffman co-founded. It was an acquisition in every respect but name, clearly designed to avoid antitrust scrutiny. Microsoft (where Hoffman is a board member) not only hired most of Inflection’s employees—it also licensed the startup’s technology in a way that seemed designed to give investors a piece of the puzzle.

Speaking to Chang on stage that day, Hoffman predicted that what happened with Inflection would become a “pattern” for future AI deals. We’re seeing that pattern play out now.

Last Friday, Amazon announced it was hiring most of the team behind Adept, another potential OpenAI competitor that has raised about $400 million from top investors to build what CEO David Luan called “a new type of giant model that turns natural language into computer action.”

Alexandra Miller, an Amazon spokeswoman, said: Edge that the company has hired “almost” 66 percent of Adept’s employees. In an internal memo published by Share‘S Taylor Soper, vice president of Rohit Prasad, said that like Microsoft did with Inflection, Amazon will also license Adept’s technology to “accelerate our roadmap of building digital agents that can automate software workflows.”

Adept’s corporate blog post about the news suggests the company is running out of money: “Continuing Adept’s original plan to build both a useful general intelligence and an enterprise agent product would require devoting significant attention to fundraising for our foundation models rather than fulfilling our agent vision.” Recent reports have the company trying to sell itself.

The truth is that building leading-edge AI models is incredibly expensive, and raising $400 million isn’t enough to compete in today’s climate. Meanwhile, Big Tech has a ton of cash and is eager to get in on what everyone thinks is the next big thing. It makes sense that more AI startups will go the way of Inflection and Adept as the industry consolidates.

The problem for Big Tech is that they can no longer buy companies like they used to. The current antitrust enforcement system would certainly try to block Amazon’s acquisition of Adept, whether there was a strong legal case for doing so or not. (Amazon executives are still fuming over not being allowed to buy a robot vacuum company.)

Still, capitalism finds a way. What Microsoft did to Inflection and Amazon just did to Adept is the new playbook for Big Tech to swallow the AI ​​industry and get away with it. Silicon Valley has a rich history of acquisitions where a startup is gutted of its people and left for dead. Microsoft and Amazon have done something that is essentially a reverse acquisition, where the hiring of people and the corresponding licensing agreement are used to hide what is really an acquisition.

Meanwhile, Reid Hoffman should be congratulated not only for his accurate prediction about the future of these deals – one of Adept’s early investors was none other than his venture capital firm, Greylock.

July 1st Amendment: A previous version of this story incorrectly stated the percentage of Adept employees employed by Amazon. The percentage is “close to” 66 percent, not 80 percent.